This is a blog that I started in october 2010, mainly for discussing my ideas on the economy, taxation and politics. Please add comments - I'll do my best to reply. If you are new, I would recommend watching one of my YouTube presentations (in French or English). You can download a fully indexed pdf version (over 600 pages) here.

7 Jan 2012

Eurozone Interest payments from 1995-2010 : 4.3 trillion euros!

I've just downloaded the amount of interest paid by governments in the Eurozone and elsewhere in Europe on government debt for the period 1995-2010 (the records don't go back any earlier) and added them all up - something that I imagine you are not usually supposed to do. The results are in the table below. It's nearly complete - there are just four countries (in italic) where the data is incomplete before 2001 - Bulgaria, Denmark, Greece and Poland. But it's pretty realistic I think.

The total of interest paid to the banks over this period is a whopping 4.3 trillion euros for the Eurozone area alone. In addition, British taxpayers have provided a further £443.6 billion in interest. Italy was particularly generous because they managed to hand over 1,280 billion to the bankers.

I've also included the numbers for the percentage of GDP that disappears into the banking system in interest charges. For the Eurozone countries it was already 3.73% for the period 1995-2010. But, as I reported in a recent post, it will go up to 4.25% when the current round of rising interest rates have worked their way through the system. Italy even managed to pay 6.45% of GDP in interest payments on their debt over the 15 year period, and Belgium was also very generous - with 5.71% of their GDP going straight to the Banks. I think that bankers should give them all a round of applause for their generosity.

Now, don't forget that the banks doing the lending to the various governments were either creating the money out of thin air, (using the miracle of fractional reserve banking), or, if they were really hard-pressed, they may have had to go cap in hand to the ECB or the Bank of England who would probably give them a pretty good rate - say 1-2% and even down to 0.5% more recently. And of course, they were taking virtually zero risk whatsoever. Only in 2011 has there been even the faintest whiff of any country defaulting. Before that, it was 15 years at least of ringing the cash register for doing nothing.

Pretty good, eh? How to make 4.3 trillion dollars for doing absolutely nothing that the Central Banks couldn't have done instead, and at much less cost to the tax payer. Of course, it did require some skill. The real skill was managing to get such an insane system in place without tax-payers noticing. And of course, you also have to be able to control all the media to make sure no-one talks about it. Oh, and pay the policians to keep quiet. No doubt that took quite a bit of money. But I suspect that even after that, there may have been a bit left over.

But, dear friends in the world of Finance. It's GAME OVER. Not only do I think that the 99% will want to get this ridiculous system fixed, but I think that we could reasonably ask for our 4.3 trillion back. A nice FTT should do the trick.